Your Taxes

[Waltzing]

Some more tax payer dollar allocated budgets...

https://www.taxpayers.org.nz/newsletter_240112
 

[Waltzing]

More reports of waste...

https://www.taxpayers.org.nz/

[Shareguy]

From 1 April new trust rate goes from 33 to 39 percent. Government is in for a big windfall. Went to see accountant last week who said we need to get retained earnings sorted. Up shot is paying a large amount to IRD to have those retained earnings at 33 percent. Some trusts will be paying millions in tax now to save a bob in the future.

Those with trusts need to sort now.

Info from Craig's

Trusts, tax rates and PIEs
If you hold some of your investments in a trust, your tax rate is going up next week.
You might need to rethink the types of assets you own and the investment vehicles you
choose, to ensure you're not paying more tax than you need to.
But beware, the impost might not be the showstopper some are suggesting it will be, and
it doesn't always make sense to build an investment strategy around tax minimisation.
Fine-tuning could be the order of the day, rather than a dramatic recalibration of your
approach.
From 1 April, the tax rate for trustees will increase from 33 per cent to 39 per cent, for all
trusts with income over $10,000.
This tax hike brings the trust tax rate into line with the highest personal tax rate.
It is expected to encourage investors who own their assets in a trust to move into Portfolio
Investment Entities (PIEs), which attract a maximum tax rate of 28 per cent.
Almost all the unlisted managed funds in New Zealand are PIEs, as are some listed
vehicles such as real estate entities like Goodman Property Trust and Precinct Properties.
Moving some of your directly-owned trust assets (such as your fixed income or shares) into
a similarly-exposed PIE vehicle will indeed save you some money on your tax bill.

New Zealand doesn't have a capital gains tax, and only income attracts the ire of the
taxman.
Cash, term deposits and fixed income (assuming it's held to maturity, rather than traded)
only generate returns via income, which means these assets will feel the brunt of higher
taxes most.
Using the five-year government bond yield (which has averaged 4.8 per cent over the
past 30 years) as a guide, the after-tax return improves from 2.9 per cent to 3.5 per cent if
one can reduce their tax rate from 39 per cent to 28 per cent.
While that's only marginally above half a per cent, it's a reasonable proportion of the
overall return.
When it comes to shares, things get murkier.
New Zealand shares have delivered an annual total return of 8.6 per cent over the past
30 years, which increases to just above ten per cent if we account for imputation tax
credits.
About 40 per cent of the return has come from share price gains, which are untaxed,
while the majority has been from cash dividends.
After taxing those dividends at 39 per cent, the annual tax drag is 2.6 per cent, which
means the total return falls to 7.4 per cent.
At the lower PIE tax rate of 28 per cent, the tax drag is 1.9 per cent, which means the
total return only falls to 8.2 per cent, a saving of almost three quarters of a per c

[Ferg]

From 1 April new trust rate goes from 33 to 39 percent. Government is in for a big windfall. Went to see accountant last week who said we need to get retained earnings sorted. Up shot is paying a large amount to IRD to have those retained earnings at 33 percent. Some trusts will be paying millions in tax now to save a bob in the future.

Those with trusts need to sort now.

I agree IRD are in for a windfall.

This will require attribution of income to beneficiaries, who are then taxed at personal tax rates.  So if the income allocated is high enough, then the savings could be limited depending on the tax position of the individual(s). 

Much like companies owned by Trusts - there appears to be a rush to declare dividends in the March 2024 period to flush out retained earnings and imputation credits.  BUT any such transaction, if it is not normal practice, could be deemed as a transaction designed purely to avoid tax, possibly with consequences under the anti avoidance provisions (perhaps?  I'm no expert).

I bet those private companies that have never declared a dividend in their lifetime now wish they had been doing it quarterly.

[Shareguy]

I agree IRD are in for a windfall.

This will require attribution of income to beneficiaries, who are then taxed at personal tax rates.  So if the income allocated is high enough, then the savings could be limited depending on the tax position of the individual(s). 

Much like companies owned by Trusts - there appears to be a rush to declare dividends in the March 2024 period to flush out retained earnings and imputation credits.  BUT any such transaction, if it is not normal practice, could be deemed as a transaction designed purely to avoid tax, possibly with consequences under the anti avoidance provisions (perhaps?  I'm no expert).

I bet those private companies that have never declared a dividend in their lifetime now wish they had been doing it quarterly.

My understanding is that the law has not been passed yet so may get pushed out to next year or be retrospective.

[sideline]

My understanding is that the law has not been passed yet so may get pushed out to next year or be retrospective.

The third reading passed on Wednesday morning. All it needs is a signature from the Governor General.

from parliament:


A party vote was called for on the question, That the Taxation (Annual Rates for 2023-24, Multinational Tax, and Remedial Matters) Bill be now read a third time.

Ayes 68

New Zealand National 49; ACT New Zealand 11; New Zealand First 8.

Noes 55

New Zealand Labour 34; Green Party of Aotearoa New Zealand 15; Te Pāti Māori 6.

Motion agreed to.

Bill read a third time.

The House adjourned at 12.11 p.m. (Wednesday)

[Waltzing]

 1995 paprer  from the accounting society advanced trusts ...

dont leave home with out it...

if your accountant does not have this document ... well they should have read it decades ago...

[Shareguy]

A windfall it is

https://www.nzherald.co.nz/business/dividend-payments-double-to-nearly-50-billion-ahead-of-trustee-tax-rate-rising/P7T7F72WP5G35M5OGRJ3ANA5AQ/

[Waltzing]

and your local rates ....

https://www.youtube.com/watch?v=0ug-w6EGexI